After Group B was banned for the WRC effective at the end of 1986, most manufacturers turned to rally raid and hill climb events to run their cars. By the end of 1987, the top rallycross fields were consisted almost entirely of Group B cars. A year later, Peugeot saw an opportunity to keep the 205 Turbo 16‘s immense prowess alive a bit longer by running a car in the very popular French Rallycross Championship. To make sure that success would be achieved the Concessionaires Peugeot France team was put under the wing of Peugeot Talbot Sport (PTS).

For the 1988 running of the series, PTS chose to use one of the 1987 Pikes Peak edition 205 T16 “E3″s that were unable to defeat Audi at the famed American hill climb event. While the Pikes Peak 205’s XU9T engine had a claimed 550 BHP for 850 kg of weight, the rallycross version’s displacement was decreased from 1905 cc to 1758 cc (to comply with the 960 kg / 2115 lb weight class rules) which still produced a healthy 510 BHP and a bit more torque.

The 6-speed transmission was amputated of its top gear since it was not needed in the tight rallycross courses.

In rallycross, almost everything was permitted to gain an edge over the competitors so the car sported a new front lip spoiler and a latter addition incorporated a large supplemental rear wing for added downforce and increased traction at high speeds.

The combination would prove successful which resulted in three consecutive French Rallycross Championships from 1988 to 1990; drivers Guy Fréquelin, Philippe Wambergue, and Jean-Manuel Beuzelin, respectively. After this incredible winning trilogy, PTS would end all of its rally operations to instead concentrate on its new effort in the World Sportscar Championship.